Wednesday, March 23, 2016

A
long rumored sale by CBS of its entire radio division is in the works
according to numerous sources. CBS is the owner of local Los Angeles
stations KNX (1070 AM), KRTH (101.1 FM) Jack (93.1 FM), KTWV (94.7 FM),
Amp Radio (97.1 FM) and KROQ (106.7 FM). Nationwide the company owns 117
stations in 26 markets.

The
rumor of a sale came from comments made by CBS Chairman and CEO Leslie
Moonves, who said last week that he was exploring “strategic options”
for the radio division that was once a crown jewel for the company but
now appears to be holding it back.

However,
while I am the first to admit that I’d like to see the stations become
locally owned and operated, nothing in the statement indicated that a
sale was imminent, nor that it would happen soon. On the contrary,
Moonves was clear to say that he was exploring options -- which could
include anything from spinning off the division as a separate company to
selling stations wholesale. He was also clear in stating that the
company would take its time in deciding what to do as it hopes to
“unlock shareholder value.”

Unlike
Cumulus and iHeart Media, CBS never went on a buying spree that left it
saddled with debt it cannot pay. The only station recently sold is KFWB
(980 AM), a station it held illegally for over a decade as it found
itself over the ownership limit. But as a company, with notable
exceptions such as KFRC/San Francisco where it stupidly sold the best
signal in the area, it tends to do at least a decent job running
stations.

CBS
is even one of the last group owners to have live personalities on many
stations overnight, something dropped by many stations years ago.

Essentially,
CBS is the victim of bad moves by competitors that have brought down
the entire industry. Bad programming and huge commercial loads have
driven people to find alternative means of entertainment ... and
advertisers to find ways to make ads stand out. Radio itself, though --
at least in my opinion -- still has a lot of life left in it, and can
easily be “fixed.”

Personally,
I don’t see CBS selling outright. They MAY spinoff the division as a
separate publicly-traded company, at which time it would ironically be
able to buy the likes of Cumulus and iHeart Media which ave been
teetering on bankruptcy.

But
what I see instead is CBS selling what they consider underperforming
stations or clusters in underperforming markets and holding on to its
crown-jewels, such as KNX, KROQ and KRTH. The remaining group of
stations would add much to the bottom line of the company while allowing
resources to focus on rebuilding a brand damaged less by itself than by
its competitors.

That’s
actually what should be done by iHeart and Cumulus, though time is
short for those companies feverishly trying to restructure debt. And
it’s why the FCC should reinstate ownership limits so that no company
can own more than three stations in a market and no more than 50
stations nationwide. The combination on local ownership and reduced or
eliminated debt will do much to save radio.

It’s
not Spotify or iTunes or anything else hurting radio, it’s the current
ownership structure created by the FCC deregulating the industry and
essentially eliminating caps on the number of stations one company can
own. We know that now. Will the impotent FCC ever do anything about it?